By: OrePulse

Eco (Atlantic) Oil & Gas Ltd. has completed the farm-down of a 37.5 percent working interest in Block 1 CBK, an offshore exploration license off South Africa's coast, to Navitas Petroleum LP, which will take over as operator of the block, the company said this week.

The deal closed after receiving regulatory clearance from the South African government and the TSX Venture Exchange. Under the resulting ownership structure, Eco and Navitas each hold a 37.5 percent stake in the license, while OrangeBasin Energies retains the remaining 25 percent. An option in the agreement could later shift those holdings to 47.5 percent for Eco, 47.5 percent for Navitas, and 5 percent for OrangeBasin Energies.

As consideration for the stake, Navitas paid Eco $4 million in cash and agreed to cover Eco's share of the upcoming work program, with that carry capped at $7.5 million. Eco will repay the carried amount from proceeds of future production on the block, limiting the company's near-term cash outlay on the exploration work.

Block 1 CBK spans roughly 19,929 square kilometers off the South African coast. The acreage already carries some technical de-risking from earlier drilling: three legacy wells confirmed gas, and one test produced 32.4 million standard cubic feet per day. Additional wells on the block turned up further gas shows and signs of oil, results that helped make the license attractive to an incoming operator.

Eco Atlantic Chief Executive Gil Holzman framed the transaction as an extension of the company's existing ties to its new partner. "Completion of the Block 1 CBK farm down marks another important milestone in our Strategic Framework with Navitas," Holzman said.

Eco Atlantic, listed on London's AIM market under the ticker ECO, the TSX Venture Exchange under EOG and traded over-the-counter in the United States as ECAOF, is pursuing the handover as part of a broader reshuffling of its exploration portfolio. The company is also working to complete a separate acquisition of JHI, has farmed down assets in Namibia to BP, and is negotiating a new production-sharing agreement covering the Orinduik block offshore Guyana.

For Navitas, taking operatorship of Block 1 CBK extends its footprint in South African offshore exploration, adding a large, partially de-risked license to a portfolio built in part on the earlier well results that Eco and its partners established on the block.

Combined, the cash payment and capped carry value Navitas's consideration to Eco at up to $11.5 million. Arrangements of this kind let a smaller explorer bring in a better-capitalized partner to fund an upcoming work program without shouldering the full cost itself. At the same time, the incoming operator gains exposure to acreage that already carries some technical de-risking from prior drilling. The completed transaction leaves Eco with a reduced but retained stake in Block 1 CBK, along with the prospect of a larger position later if it exercises the embedded option.